hook, maybe Darvas was blissfully ignorant and surely never heard of back testing and back testing and more back testing?
trend_guy, brandonf, eshmama, I`m curious how you guys would enter a trade. still Darvas` way of a break-out from the top box OR a pull back from the all-time high, forming the low of the new box on lower volume and resuming the trend towards the high on increasing volume - do you enter here? OR ??? thanks for your help.
I generally enter on breakouts but sometimes my points aren't what you would call typical break points (such as the ATH).
Typically I like to see a high volume breakout from a base, and I will initiate my position from there with a small lot. I next want to see how the pullback handles itself (lower volume than the breakout), and if it does well I will add to the position. If not I tighten the original stop way up and look to be getting out. Brandon
Vetten, I can understand what you are going through...FEAR OF LOSS(UNKNOWN FUTURE)... Oh GOD what will happens that X gaps down as soon as I buy..OR X falls as soon I buy..OR maybe I am unable to select the Right stock.... I too wasted 2 years trying to plug ALL HOLES before I realised that IT IS OK TO BE WRONG.... You can be wrong sometimes and still make a lot of money. -------- As to answer to your question - I am not as meticulous as the other 2 gentlemen in my timing... I start buying as soon as I think 'THIS MIGHT BE THE STOCK'.... I don't wait for the next base, pullback etc..etc...because I am scared that I might miss the move completely. Only thing I do is I don't put all my money in one go. normally it takes me about 1 month or more to deploy all my money and about 4-5 increments. And each increment I take as a new position.. I hope this helps... Raj
Vetten, I can understand what you are going through...FEAR OF LOSS(UNKNOWN FUTURE)... Oh GOD what will happens that X gaps down as soon as I buy..OR X falls as soon I buy..OR maybe I am unable to select the Right stock.... I too wasted 2 years trying to plug ALL HOLES before I realised that IT IS OK TO BE WRONG.... You can be wrong sometimes and still make a lot of money. -------- As to answer to your question - I am not as meticulous as the other 2 gentlemen in my timing... I start buying as soon as I think 'THIS MIGHT BE THE STOCK'.... I don't wait for the next base, pullback etc..etc...because I am scared that I might miss the move completely. Only thing I do is I don't put all my money in one go. normally it takes me about 1 month or more to deploy all my money and about 4-5 increments. And each increment I take as a new position.. I hope this helps... Raj
Raj, great post ! I would agree one hundred percent ... If my optimal position is X dollars, I would rather by in .5X versus missing the move. Sometimes I get in late and size down a bit with a wider stop because I feel I may not get a great entry before a big run ... if a great entry comes I can always take it then.
I`m really stoked will all your responses gentlemen. now as to price. Darvas didn`t want to enter low-priced stocks. partly because the brokerage was a lot higher (not a reason today), but also those lower priced stocks jumped around too much. sometimes those stocks are 3/4 times their yearly low before they even hit $ 10. do you guys have a price cut-off level? are there any web sites (not only a lot of blahblah and no action) that devotes itself to this type of trading that might be useful? thanks guys.
the leaders are usually high priced... one of the best guys to follow if you are new is Zanger... www.chartpattern.com
Vetten, Get Darvas' book and re-read it if you have to. It's freely available. He explains step-by-step how he traded, what and why. And it's all still relevant today. Some of my greatest profitable trades were Darvas-like. And furthermore, the book's a fantastic read, one of the best trading stories ever told. I would have loved to meet him.